TMI Blog2011 (3) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... s course of conduct to show that, that is the way the said claim is reflected in the accounts. Thirdly, it should be bona fide one - Held that: all the above conditions are satisfied in the present case - Decided in the favour of assessee - IT APPEAL NO. 1006 OF 2008 - - - Dated:- 22-3-2011 - N. KUMAR AND RAVI MALIMATH, JJ. Ravind and M.V. Seshachala for the Appellant. Deepak Chopra, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tribunal. The Tribunal held that the assessee is following mercantile accounting and has also followed settled principles of accounting and taxation laws. From the year-end statement of liabilities, due to fluctuation in rate of foreign currency, loss is allowable on a year to year basis, as the loss is not notional or contingent, but an actual loss. The event which gives rise to the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge difference as on the date of the balance sheet is an item of expenditure allowable under section 37(1) in the year of accrual, however, the Supreme Court has held, in order to find out if the expenditure is taxable, five tests have been prescribed. Therefore, only, if the said five tests are satisfied, the assessee would be entitled to said benefit. As in this case, none of the authorities hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first and foremost requirement is that he must be adopting mercantile system of accounting. Secondly, the said loss should have been claimed not only in the year in dispute, but a continuous course of conduct to show that, that is the way the said claim is reflected in the accounts. Thirdly, it should be bona fide one. The Tribunal on appreciating the material on record had held that the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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